Jobs and Growth

Andrew Selous Excerpts

Thursday 17th May 2012 Commons Chamber

[Ed Balls]

I will make some progress.

Is it not the reality that we have an economy in recession and a Queen’s Speech that entirely failed to deliver on growth, jobs and investment? The Chancellor’s economic strategy is now in tatters, but have we had any admission in recent weeks that he got it wrong? We have had none. The Foreign Secretary says that British business needs to work harder, but it is this Chancellor who needs to work harder to get things right.

[Andrew Selous (South West Bedfordshire) (Con)]

rose—

[Ed Balls]

I will not give way.

Let me say this to the Chancellor. We all know why he has wanted to be a part-time Chancellor: in order to make room for his other role as the Conservative party’s part-time political strategist. But with the Budget botched, the Queen’s Speech a flop, the local elections a disaster for his party, and the economy back in recession, it is now dawning on all of us—I think it is dawning on many Conservative Members too—that he is not a very good Chancellor and not a very good political strategist either. Although should we really be surprised? This is the Chancellor who claimed to his colleagues that hiring Andy Coulson would be a triumph; that taking away child benefit from middle-incomes families would be a masterstroke; that saying that the economy was “out of the danger zone” was smart forecasting; and that cutting the top rate of tax in this Budget would wrong-foot Labour, and outfox his leadership rival Boris Johnson too. With judgment like that, perhaps the Conservative party does not need just a new political strategist; perhaps it needs a new Chancellor too.

[Andrew Selous]

Will the right hon. Gentleman give way?

[Ed Balls]

No, I will not.

What an eight weeks it has been! The transformation has been startling, with the Chancellor’s long-held dreams turning to dust. He dreamed that his brilliant economic plan would bring unprecedented growth and finally deliver a Tory majority in 2015, and that a grateful Prime Minister would then stand aside, as he was finally cheered into 10 Downing street. How far away those dreams seem now!

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[Mr Osborne]

The Labour party certainly does have a different whipping operation: it sends all its information to the other political parties.

Let us get back to discussing the economy. The central argument that the shadow Chancellor was trying to make, and the argument he makes in the amendment, is that the British economy is not as strong as the German economy—that is what we are all being asked to vote on tonight. He is absolutely right about that. The British economy is not as strong as the German economy, and I will tell hon. Members why. It is because for the past decade, in the good years, Germany fixed the roof when the sun was shining and he did not when he was in government.

I will tell hon. Members what happened when the right hon. Gentleman was in government. Over the decade before the crash, Germany maintained its share of world exports while Britain’s share almost halved; Germany was selling more than £10 billion of goods a year to China while Britain was exporting one fifth of that—indeed we were exporting more to Ireland than to Brazil, India, China and Russia put together; and Germany’s manufacturing sector grew by 34%, whereas our manufacturing sector not only did not grow but halved as a share of our total output, while our over-leveraged banking sector grew by 100%. Germany, after years of sustainable economic growth, entered the financial crisis with a budget surplus. Britain, in the years that he was in charge, led a debt-fuelled consumption that drove an expansion in deficit and in debt. Under Labour we entered the financial crisis with the largest budget deficit in the G7 and left it with the largest in the G20.

Instead of making us more like Germany, the right hon. Gentleman made us more like Greece when he was in the Treasury. Britain’s economy became over-borrowed, unbalanced and unsustainable. The person more responsible for that than anyone else active in politics today, the person who encouraged the borrowing, dismantled the banking regulation and gambled the futures of 60 million people on the City of London, is sitting right over there—the shadow Chancellor. It is the people on this side of the House who are clearing up the mess he left behind.

[Andrew Selous]

Does the Chancellor agree that one of the infrastructure failures left by the previous Government was the lack of direct flights from this country to the big, growing cities of China—there are many more flights from German cities to China—and that the Government will put that right in due course?

[Mr Osborne]

I certainly think that a lack of airport capacity is a challenge for this country, but one of the good things that may emerge from the bmi merger is that more slots may become available at Heathrow to open up routes to those cities in China. My hon. Friend makes the very good observation that we have to do much more to expand our exports and our links with the Chinas and Indias of this world. One of the good things that has happened in the past few years is that our exports to China and India are up by a third, and we need to see more of that.

In his speech, the shadow Chancellor dismissed the Governor of the Bank of England as plain wrong. Who appointed the Governor? Did the recommendation ever come across the desk of the shadow Chancellor when he was the political adviser in the Treasury? [Interruption.] We will find out. Yesterday the Governor said:

“We have been through…the biggest downturn in world output since the 1930s, the biggest banking crisis in this country’s history, the biggest fiscal deficit in our peacetime history, and our biggest trading partner, the euro area, is tearing itself apart”.

My message to the House today is that addressing those problems is not easy, but nor is it impossible. I will come on to talk about the eurozone, but first we must put our own house in order, and we are making progress on doing so.

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[Andrew Selous (South West Bedfordshire) (Con)]

Up until 2007, the Government were running unsustainable deficits and had an escalating level of debt, and that was before the financial crisis hit. Governments have a choice: they can either run their finances sustainably or give up the right to economic self-government, and there are lots of examples of that in Europe at the moment.

In tough times, this Government have created 600,000 new private sector jobs. There are 370,000 more people in work now than there were at the general election and 70,000 fewer people on out-of-work benefits than when we were elected. As from last month, we have the youth contract coming into play, which will also make a difference. Furthermore, we have made progress on the deficit, which we have already cut by a quarter. That has led to low interest rates; and we should remember that every 1% increase in interest rates puts £1,000 on an average family mortgage.

Business taxes are coming down to 22%, which will be one of the lowest rates in the G20. With the patent box, we have, in effect, 10% corporation tax rates on patents that are exploited here in the UK.

I am glad to see the Minister of State, Department for Education, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb), on the Front Bench. I pay tribute to the work that he is doing to improve school standards. What with his work, the 457,200 extra apprenticeships—an increase of 63%—and the new university technical colleges that are being rolled out, we are well on the way to building up the educated, flexible work force that this country will need for it to be an economic success in future.

People need hope and confidence in tough times, and I, for one, am fed up with the diet of gloom coming from the media about the eurozone. Yes, 48% of our trade is with the European Union, and therefore it matters, but the EU comprises only 19% of the world economy, and we need to remember that the other 81%—Asia, the Americas and Africa—is growing strongly, in some cases by 10%. The world economy is due to triple over the next 30 years, and that provides fantastic opportunities. I pay tribute to the work of UK Trade & Investment and the role of the Foreign Office in helping exporters. Last week, I spoke to people from local businesses in my constituency, and they confirmed that that help is real, practical and available on the ground.

I am well aware of the difficulties that businesses have trying to raise credit to expand. That is why the £20 billion loan guarantee scheme is helpful. I heard only yesterday that Santander will be putting 650 managers back into local branches to take local decisions. That link between the local manager and local business is very important. It has been broken by many banks in the past, and I am glad that that is being dealt with. New methods of raising finance for business, including crowd-financing and websites such as Kickstarter.com, can help as well.

The UK is one of the most entrepreneurial countries in the EU. We have 4.5 million small businesses; in 1989, there were only 2 million. However, if we were as entrepreneurial as the United States of America, there would be another 900,000 small businesses in the UK, and many of the Government’s problems would be over. We need to make the UK an enterprise hub for the whole of Europe. There is evidence that many of the small businesses that are being created naturally end up exporting, which they can do very easily through the power of the internet.

Finally, I pay credit to the Government for focusing on infrastructure funding. As I look at my constituency, I see roads being built for which we have waited years, a new busway coming, a business innovation centre, and a new university technical college.

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[Mr Byrne]

I will not give way, because there are so many points to respond to.

We know that this recession was not made by British business. It is not down to the weather, the snow or the royal wedding; it is down to the failed policy of this Government. Despite the good news we had on unemployment this week—there was a glimmer of hope—Britain’s jobs crisis has now gone on for too long. We now have more people working part time or becoming self-employed, because they will do anything to make ends meet. Long-term unemployment is surging towards the 1 million mark, the number of people out of work for two years is up to 500,000, 100,000 more people are signing on than last year, redundancies are up by 50,000, and vacancies are down by more than 10,000. Families all over Britain are facing a disaster, because of the failed policies of this Government.

This afternoon we heard those stories from all over Britain. The point was made forcefully by my hon. Friend the Member for Liverpool, Walton (Steve Rotheram), and it was a story repeated by my hon. Friends the Members for Ogmore (Huw Irranca-Davies), for East Lothian (Fiona O'Donnell), for Blackpool South (Mr Marsden) and for Leicester South (Jonathan Ashworth). We heard in the debate this afternoon that we need growth and demand—a point made by my hon. Friends the Members for Oldham East and Saddleworth (Debbie Abrahams), for Gateshead (Ian Mearns), for Great Grimsby (Austin Mitchell) and for East Lothian. We heard how higher unemployment is hitting some communities and some regions harder than ever—that was the point made by my hon. Friend the Member for Wirral South (Alison McGovern). It is hitting ethnic minorities harder than ever—that was the point made by my hon. Friends the Members for Stretford and Urmston (Kate Green) and for Oldham East and Saddleworth. It is now hitting young people harder—that was the message we heard from hon. Members from all parts of the House, and it was a point made with particular force by my hon. Friends the Members for Islington South and Finsbury (Emily Thornberry) and for Birmingham, Ladywood (Shabana Mahmood).

That is why what we needed in the last Budget and in the Queen’s Speech was not excuses, but action. We needed action on bank lending—that was the point made by my hon. Friends the Members for Leeds East (Mr Mudie) and for North Ayrshire and Arran (Katy Clark), and by the hon. Members for North East Cambridgeshire (Stephen Barclay), for Northampton South (Mr Binley) and for Aberconwy (Guto Bebb). We needed action on infrastructure spending, too—that point was made with great force by my right hon. Friend the Member for Barking (Margaret Hodge), the hon. Member for Erewash (Jessica Lee), and my hon. Friends the Members for Glasgow North (Ann McKechin) and for Glasgow Central (Anas Sarwar). This absence of action is now costing this country a fortune.

[Andrew Selous]

rose—

[Mr Byrne]

Perhaps the hon. Gentleman will tell us just how much the benefits bill is increasing as a result of that failure.

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[Andrew Selous]

When the right hon. Gentleman wrote his famous note saying that there was “no money” left, what did he think the implications of that were?

[Mr Byrne]

The hon. Gentleman speaks for a party that has now put up borrowing by £150 billion more than projected. Does he know why? It is in large part because the benefits bill is not being capped by this Government—the benefits bill is going through the roof. It is set to be £25 billion higher than was projected by the end of this Parliament, with the cost of unemployment benefit set to be up by £5 billion and the cost of housing benefit set to be up by £6 billion by the end of this Parliament. I really do not know how he has the temerity to say what he has just said, given that it is his Government who are putting up debt.

The problem is that this Government have not learned the lesson that the way to bring the benefits bill down is by getting people into jobs—that is where this Government are failing. It is no wonder the people all across Britain are saying that this Prime Minister and this Chancellor have no idea how ordinary people live. The Prime Minister is riding on horses with editors of newspapers who are charged with perverting the course of justice while our young people cannot even afford a bus fare to college. We heard this afternoon just how much that bill has now become in a powerful speech from my right hon. Friend the Member for South Shields (David Miliband). We heard that youth unemployment will cost our country £30 billion over the years to come. When are this Government going to heed that lesson?

When will they look at the hit now being taken by working parents, who are struggling with child care? These parents are now losing £500 this year. No wonder 32,000 women have already had to give up work this year because they cannot afford the child care. We should look at what this Budget means for working parents—a point made with some eloquence by my hon. Friend the Member for Islington South and Finsbury and by my right hon. Friend the Member for East Ham (Stephen Timms). Such is the incompetence and such is the incoherence that families in this country are now better off on benefits than they are in a job—what a catastrophic failure of policy and what a catastrophic failure by this Chancellor.

Look at what these proposals mean for savers—people doing the right thing. Alongside the granny tax, the Government tried to sneak out in the Budget small print another £900 cut for pensioners by getting rid of the savings credit. Look at what the proposals mean for workers with disabilities. Some 11 million people in this country have disabilities. Disability Rights UK says that 25,000 people with disabilities have had to give up work this year because their support and help are being cut away from them. This Secretary of State for Work and Pensions is now administering reform of the incapacity benefit system with all the finesse of border control at Heathrow airport. It is now taking people up to 11 months to get a hearing and then, when they reach that tribunal, half the decisions are being overturned. That is not a result that he can be proud of.

Worst of all is the treatment being handed out to workers at Remploy. These are workers indirectly employed by the Secretary of State himself. Worst of all—worse than anything I have heard over the past few months—are the reported comments that he made to Remploy workers. Apparently he told them that they “are not doing any work at all. Just making cups of coffee.” That is not compassionate conservatism; it is the conservatism of contempt. The Secretary of State should apologise to those workers this afternoon. When he should have been launching a war on poverty, he has launched a war on decency.

This Government have no idea how these young people, these parents, these working mothers and these workers with disabilities are now living. They are failing on jobs, they are failing on growth, and they are out of touch, out of their depth and out of steam. We need a change of direction and Labour’s amendment today offers that. I commend it to the House.